By the age of 30, most teenagers in the UK expect to be earning significantly more than the national average.
Findings from the 2016 Young Persons’ Money Index, published by The London Institute of Banking & Finance, reveal today’s students believe they will be earning more than £47,000 a year by the time they reach their fourth decade, nearly £20,000 a year more than the current average (PDF).
Expectations are highest amongst male students, who predict that they will receive a salary in excess of £54,000, which stands in contrast to the £30,400 the average 30 year old man earns today. Among female students, expectations are similarly high, with teenage girls hoping to earn £42,850 per year, nearly £15,000 more than the average 30 year old woman currently receives.
Over the course of an average 45-year working life, based on this earnings gap, teenage boys will face an earnings shortfall of £1,071,964 and girls £668,828.
Despite these inflated expectations, The Young Persons’ Money Index also reveals a hugely inconsistent level of financial confidence and competence demonstrated by UK teenagers. While many exhibit positive behaviours such as saving regularly and interacting with their banks, 78 per cent remain reliant on their parents for financial decision making, while nearly one in five have not performed an independent financial transaction by the age of 18.
Alison Pask, Managing Director, Financial Capability & Community Outreach at The London Institute of Banking & Finance, said:
“While the world is changing and today’s teenagers will undoubtedly face different financial pressures and opportunities than those encountered by today’s 30-somethings, the fact remains that a key part of financial capability is the capacity to understand financial worth and the value of money. The economic reality is that the majority of teenagers will not earn the sums they currently expect and as an industry, we must provide them with the tools to understand this and use their earnings responsibly and effectively, whatever they may be and wherever life takes them.
“A good financial understanding equates with greater employment prospects and career enhancement, so it is vital that today’s teenagers – if we want them to meet their own high expectations - are provided with clear, consistent and effective financial education.”
Learn more about The Young Persons' Money Index and to read the report in full, visit: www.libf.ac.uk/ypmi.